Foreign Relations of the United States Diplomatic Papers, 1941, The American Republics, Volume VII

638.3931/5

The Secretary of State to the Minister in Haiti ( White )

No. 224

Washington , October 7, 1941.

Sir: Reference is made to the Legation’s despatches nos. 340, 347, 349 and 373 of August 25, 27 and 28, and September 5, 1941, respectively, and to the Department’s telegram of September 10,⁴⁰ with regard to a proposed commercial convention between Haiti and the Dominican Republic.

After reviewing the unofficial text of the proposed convention as reported by the Legation, it is the opinion of the Department that it contains no provisions which would specifically prevent the Government of Haiti from fulfilling its obligations to the United States under the most-favored-nation clause of the trade agreement with this country.

However, it is noted from the despatches under reference that certain statements were made to you by the Minister of Foreign Affairs of Haiti, and by the Minister of Foreign Affairs of the Dominican Republic, implying that the proposed convention was being negotiated in accordance with a contractual formula for preferential customs treatment to contiguous countries recommended by the Inter-American Financial and Economic Advisory Committee. This formula, which was recommended by the Advisory Committee on September 18, 1941, provides in substance that any tariff preferences between contiguous countries must be made effective through trade agreements embodying tariff reductions or exemptions; that the parties to such agreements must reserve the right to reduce or eliminate the customs duties on like imports from other countries; and that any such regional tariff preferences should not be allowed to stand in the way of any broad program of economic reconstruction involving the reduction of tariffs and the scaling down or elimination of tariff and other trade preferences, with a view to the fullest possible development of international trade on a multilateral unconditional most-favored-nation basis.

The statements made to you by the two Foreign Ministers lead the Department to believe that the Haitian Government has misunderstood the nature and significance of the formula outlined above and may therefore intend to withhold from imports of similar products originating in the United States the tariff reductions to be accorded by Haiti under the proposed convention to certain imports from the Dominican Republic.

If you learn upon inquiry that such is the intention of the Haitian Government, you are requested to bring to the attention of the Haitian Foreign Minister the following points:

(1) In the opinion of the Government of the United States, the contractual formula for tariff preferences between contiguous countries recommended by the Inter-American Financial and Economic Advisory Committee does not automatically qualify the most-favored-nation provisions of existing treaties or agreements between the United States and any of the other American republics.

(2) Therefore, the Government of the United States would expect that any other American republic with which it has reciprocal most-favored-nation obligations would consult with the Government of the United States before undertaking to extend preferential tariff treatment to any articles imported from a contiguous country.

(3) In view of the foregoing, and of the provisions of paragraph (1) of Article VII of the trade agreement between Haiti and the United States⁴¹ providing for reciprocal unconditional most-favored-nation treatment, the Government of the United States would expect that Haiti would consult with it before undertaking to extend preferential tariff treatment to any article imported from the Dominican Republic.

(4) The Government of the United States would, however, give earnest consideration to such proposals as the Haitian Government might wish to make, with reference to the most-favored-nation obligations in the trade agreement with the United States, in regard to the tariff preferences it may desire to grant on certain articles imported from the Dominican Republic.

The following background information may be helpful to you in discussing this matter with the Haitian Foreign Minister. The desirability of avoiding any publicity whatever concerning this information should be pointed out, particularly in view of the fact that the formula is an outgrowth of our trade-agreement negotiations with Argentina,⁴² not yet concluded.

During the exploratory discussions prior to the public announcement of intention to negotiate a trade agreement with Argentina of May 13, 1941, the Argentine Government requested that preferential tariff treatment accorded by it to contiguous countries be exempted from the scope of the most-favored-nation clause, and in support of its request called to the attention of this Government Resolution LXXX of the Seventh International Conference of American States at Montevideo, approved December 24, 1933.⁴³

Although extremely reluctant to agree to relax in any way the application of the unconditional most-favored-nation principle, this Government indicated that, in the light of its approval of Resolution LXXX, it would accede, under certain conditions, to the Argentine request. Agreement was finally reached to effect an exchange of notes simultaneously with the conclusion of the trade agreement, providing that if, pursuant to Resolution LXXX, the Inter-American Financial and Economic Advisory Committee should recommend a contractual formula for preferences to contiguous countries identical with the one submitted to that Committee on July 31, 1941 jointly by the Governments of Argentina and Brazil, the Government of the United States would not invoke the provisions of Article I (unconditional most-favored-nation treatment) of the proposed trade agreement between the United States and Argentina for the purpose of obtaining the benefit of tariff preferences conforming to the contractual formula which Argentina might accord to a contiguous country. However, this agreement on the part of the United States was conditional upon the inclusion in a Final Minute of the negotiations assurances by the Argentine Government that, prior to according any such preference with respect to any product of interest to the United States, it would in practice afford the Government of the United States adequate opportunity for consultation. Furthermore, in the draft exchange of notes the understanding was recorded “that if any such preference should be extended by Argentina to any noncontiguous country it would be extended immediately and unconditionally to the United States.”

You are requested to continue to keep the Department currently informed with respect to any conversations in regard to this matter which you may have with officials of the Haitian Government and, in general, with respect to any other developments that may take place in connection with the proposed convention.

Very truly yours,

For the Secretary of State:

Dean Acheson

40. None printed.
41. Signed March 28, 1935; for text, see Department of State Executive Agreement Series No. 78, or 49 Stat. (pt. 2) 3737. For correspondence regarding the negotiation of the agreement, see Foreign Relations, 1935, vol. iv, pp. 642 ff.
42. For correspondence regarding the negotiation of the reciprocal trade agreement between the United States and Argentina, see vol. vi .
43. For text of Resolution, see Department of State Conference Series No. 19: Report of the Delegates of the United States of America to the Seventh International Conference of American States, Montevideo, Uruguay, December 3–26, 1933 (Washington, 1934), p. 275; for correspondence concerning this Conference, see Foreign Relations, 1933, vol. iv, pp. 1 ff.